H1 2017: Investment company performance

11 July 2017

European Smaller Companies sector leads the way

It’s been an interesting start to 2017. Article 50 was triggered, UK inflation reached a four-year high but investor confidence in the stock market has remained strong, with the FTSE 100 Index starting the year at 7,177.89 and closing at 7,312.72 at the end of June, providing a total return of 4.7%. The investment company sector has generally performed well in the first half of the year, with the average company returning 10%. Which have been the best performing investment company sectors in H1?

Europe

Over the six months to the end of June 2017, the best performing investment company sector by some margin is European Smaller Companies, up 32% on a share price total return basis. Undoubtedly the fall in sterling had a positive impact on overseas investment, with Europe having had a strong first six months generally. The Europe sector is up 22% and the Property Direct – Europe sector up 19%, putting them in third and fifth place respectively.

Smaller Companies

Smaller companies in general have seen particularly strong performance for the first half of 2017, with the Japanese Smaller Companies sector the second best performing sector overall, up 23%, and the UK Smaller Companies sector up 17%, putting it in sixth place.

Asia Pacific

Interestingly, the Asia Pacific sectors have also had a good start to the year with Country Specialists: Asia Pacific returning 20% and the Asia Pacific excluding Japan sector returning 16%. The Japan sector completes the list of top 10 best performing sectors, with a share price total return of 14% over the half-year to the end of June 2017.

The complete list of the top 10 best performing investment company sectors can be found below.

Commenting on the best performers of the year so far, Annabel Brodie-Smith, Communications Director, Association of Investment Companies said: “The fall in the value of sterling since the Brexit vote, together with positive European election results, has contributed to the strong performance of the European investment company sectors. Nonetheless, the 32% share price total return from the European Smaller Companies sector over the six months to the end of June is an impressive achievement.

“Investment companies generally perform well in strong markets and the first half of the year reflects this, with the average company up 10% and the average discount narrowing from 3.8% to 1.7%. Of course, it’s interesting to look at the top performing sectors but there’s no guarantee that this performance will be repeated. Investors need to invest for the long term, hold a balanced portfolio and must do their research on potential investments bearing in mind their financial needs. If investors have any doubts over investing they should talk to a financial adviser.”

The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment. Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 349 members and the industry has total assets of approximately £168 billion.

Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investment company shares, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all.